Thursday, June 24, 2010

Business Week on Vietnams economy: WTF?

Business Week runs a story with the headline: Is Vietnam Finally Ready for Foreign Investors?" They say
Hanoi is cutting taxes and improving infrastructure in hopes of becoming the low-cost alternative for new factories and outsourcing call centers

Where have they been the last years? Actually the time for outsourcing in the software industry is nearly over in Vietnam, many companies are suffering right now and looking for domestic business. Same for call centers (what is by the way quite funny knowing the language skills in Vietnam.)

For factories VN might be still a good place, but they did not mention all the strikes in the past, as well as the strict labour laws. And you may find cheap workers, but not skilled ones.

President Nguyen Minh Triet's government has cut taxes, such as import duties on personal computer parts, and is promising to improve the country's roads and ports. It's building nuclear power plants and a high-speed train line from the capital to Ho Chi Minh City.

First, the National Assembly just rejected the plans for the train. Second, what is announced is not necessarily realized. And actually VN just raised taxes for unnecessary goods, whatever that means. And the Worldbank and others recently mentioned that VN needs innovation, otherwise it will not succeed because there will always be a country with cheaper labour force.

The leadership also vows to eliminate some of the notorious red tape that has frustrated investors.

Arent they vowing this since decades?


Hendrik Beck said...

Thomas, what makes you think that the time for software outsourcing in Vietnam is nearly over?

Thomas Wanhoff said...

Simply the fact that I know a lot of companies who are struggeling because of the decrease of contracts from US. And I am sure that it's a matter of time when cheap labour in Vietnam will have an end in the software sector. Then outsourcing wont be that competitive anymore. Combine that with a lot of obstacles from the government, and you may what I mean. (and yes, I also know quite successful outsourcing companies in VN)

Anonymous said...